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3)  Higher minimum wage solutions for the poor can have encouraging multiplier effects to the economy. Elucidate.(250 words)

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

3)  Higher minimum wage solutions for the poor can have encouraging multiplier effects to the economy. Elucidate.(250 words)

The hindu

Why this question:

The article discusses in detail the impact of minimum wage solutions for the poor and in what way it would impact the economy.

Key demand of the question:

Explain what is the impact of such a policy and its effect on the economy.

Directive:

ElucidateGive a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer:

Introduction: 

Introduce by mentioning about the government’s recent decision to improve rural wages.

Body:

Recently The central government decided to adopt new indexation of NREGA wages based on CPI-Rural instead of CPI-AL, meant to increase rural incomes. The current daily NREGA wages are just a quarter of the minimum daily living wage of Rs 692 as outlined in the 7th Pay Commission.

Explain the benefits of higher disposable income for the poor on the entire economy.

Give suggestions to increase the income of poor in the conclusion.

Conclusion:

Conclude that increasing the disposable income of the poor is important not only for their livelihood but is also critical for reviving the slowdown in the economy. It is economically prudent to substantially increase the budget for public programmes such as NREGA.

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